Icesave melts

Published:
08 October 2008
Topic:
News,Money,Savings

I joked two weeks ago about it being best to put your money under the mattress. By the day it looks less like a joke and more like an option!

After all, it's one thing to talk about a bank going bust - but the economy of a whole country? Sadly, that's the situation as Iceland teeters on bankruptcy. With many UK savers having money in Icelandic savings accounts, this situation is of more than academic interest and the hot off the press news that Icesave have stopped transactions and its sister company Heritable Bank (both part of Landsbanki) has gone into administration is bad and alarming news.

Now, more than ever, the advice of spreading your savings - most sensibly to the new £50k Financial Services Compensation Scheme limit, or £100k for joint accounts - is sound.  It really doesn't make sense to keep a lot of money with one provider at present.  If you haven't yet spread your money, I encourage you to do it today, tomorrow or Friday.  We are in uncharted waters and I worry about the ability of governments in foreign countries with relatively small economies to guarantee savings balances.  Ireland will be safer than Iceland but personally I don't believe the 100% guarantee offered by Irish banks - I wouldn't put all my money in an Irish bank.

Speaking personally, at present safety matters more than rate.  Weigh up also if you want the satisfaction of being able to speak to someone either in a branch or over the telephone.  It can be frustrating and worrying if an online only provider stops transactions as Icesave have done today.

p.s. the Money team at Moneysupermarket, including our very own Kevin Mountford and Clare Francis, will be posting updates frequently.

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About This Author

Stuart Glendinning

MD, Money Channels

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